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March 3, 2009

The California Court of Appeal (Fourth District, Division Three) issued this unpublished opinion affirming a trial court order granting nonsuit on a claim for punitive damages.

Plaintiff, a homeowner who lost her home through foreclosure, sued the lender (Amerifirst) that had refinanced her initial mortgage. She presented evidence that Amerifirst had overstated her income on a mortgage application and forged her signature. The trial court ruled, however, that the plaintiff failed to present sufficient evidence of intentional misconduct by Amerifirst.

The Court of Appeal affirmed, but on a different ground. It relied on Civil Code section 3294, subdivision (b), which provides that a corporation cannot be liable for punitive damages unless an officer, director, or managing agent of the corporation authorized or ratified the misconduct at issue. In this case, the evidence suggested that the person who prepared the loan application was an employee in the processing department. She was not an officer or a director of Amerifirst, and she did not qualify as a managing agent because she did not have authority to set corporate policy. Accordingly, the plaintiff's evidence was insufficient to support the findings required by Civil Code section 3294, subdivision (b)